Longevity usually softens judgement in Asia, but the reputation of Suharto, the former president of Indonesia, has not been improved by the passing of the years since he bowed to a wave of public anger and violence and reluctantly resigned from office in May 1998. The resentment of his use of office to enrich himself and his family was exacerbated by the subsequent reluctance of the authorities to move against Suharto, his backers and even the more blatantly corrupt of his sons.

Had Suharto stepped down earlier, Indonesia might have agreed that his achievement of three decades of economic growth out-weighed his failings. As it is, his failure to create a democratic system which would have facilitated the handover of power plunged Indonesia into further years of weak government, economic crises, crimes against humanity and widespread corruption.

Suharto himself, evidently in declining health, kept a low profile during the years after his resignation, remaining quietly behind the high walls of his fortified villa in a suburb of Jakarta. The headlines were devoted instead to the fortunes of his family. In 2000, the authorities plucked up sufficient resolve to move against Suharto's favourite son, Hutomo "Tommy" Mandala Putra, who went on to serve a third of a 15-year prison sentence. A state court had declared that Suharto himself was too ill to stand trial on criminal corruption charges, although a civil case against him began this month in a Jakarta court, as he lay in hospital in a critical condition.

Suharto was born in 1921 of peasant stock, the second son of 11 children, into a minor official's family in the village of Kemusu, near Yogjakarta on the populous island of Java. After his parents divorced, Suharto was shunted round relatives' homes, absorbing both a desire for orderly security and doses of Islam and Javanese mysticism.

He joined the Dutch colonial army at the age of 19 and thereafter won promotion in the puppet military forces controlled by the occupying Japanese. After their defeat he played a prominent role in the guerrilla war for independence until final victory over the Dutch in 1950. By 1957 Suharto commanded the famous Diponegoro division; in 1960 he became Deputy Army Chief of Staff and five years later Chief of Army Staff.

By the mid-1960s, the political extremism of the charismatic nationalist leader President Sukarno had almost wiped out his once vast popularity and brought Indonesia to the brink of disaster. Domestically, its economy was in ruins while internationally it was at loggerheads with the West, waging a "confrontation" war designed to smash its newly created neighbour Malaysia, and dangerously under the influence of Moscow and more especially Beijing. Most of the top army officers, although persuaded that Sukarno must go, simply dithered. After a group of Communist-backed army officers (supposedly with Sukarno's approval) attempted a pre-emptive coup, assassinating six generals, Suharto and his strategic command at last moved.

Even so, he proceeded cautiously. Anti-Sukarno demonstrations were mounted under the army's benignly silent guns and security forces turned a blind eye while the people took a bloody revenge on the forces of the left. Throughout the country, members, supporters and suspected sympathisers of the Parti Kommunist Indonesia were massacred; it was estimated that up to one million were killed, while many more were imprisoned or detained without trial. Shorn of his support, Sukarno's power gradually shrank ("slicing the salami", they called it) until Suharto assumed the presidency in 1967.

The auguries were good and with uncharacteristic briskness Suharto set about restoring stability and reviving the economy. Confrontation with Malaysia was ended and relations with the rest of South-east Asia mended (with a few hiccups, they have gone on improving ever since). The influence of the Sino-Soviet bloc faded as fences were mended with Japan and the West.

The change of regime, the first example of a major Asian power changing sides in the Cold War, was particularly welcome to the United States, deeply embroiled in nearby Vietnam and very willing to back anti-Communist military dictatorships. American aid was offered and accepted, and permanent offices of the World Bank and of the major aid donors in Jakarta supervised the allocation and implementation of international aid and loans.

An able team of largely American-educated economists and technocrats (swiftly dubbed the "Berkeley Mafia", since a number had attended Berkeley University in California) was put in charge of the economy, under instructions to create a "new order". Gradually they brought the rampant inflation under control (anyway less than 10 per cent a year) and began a largely successful long-term programme to lift Indonesia out of its grinding poverty, to make it self-sufficient in rice, to establish an industrial base, to impose birth control and to eradicate poverty.

A revised constitution set up the MPR, a parliament largely composed of presidential appointees and members of Golkar, a pro-establishment party representing various professions and trades. A preponderant role for the military was assured by its self-proclaimed "dwifungsi" (or "double function"), not only in defence but in the maintenance of social security. The military cracked down on all dissent and all forms of extremism, from left-wingers to fundamentalist Muslims.

The five-principled state philosophy of "Pantjasila" was revived, demanding belief in humanitarianism, national unity, social justice, democracy and belief in god – be he Allah, Buddha, Christ or any other deity. A very real sense of national identity was achieved in the sprawling archipelago of over 13,000 islands and 190 million people of differing ethnic origins.

This appearance of a bland national consensus was presided over by a remote, apparently benign and tolerant Suharto. The so-called "Smiling General" was referred to by his supporters as "babak" or "father" (of the nation) or simply the "Old Man". He enjoyed the sobriquets of the "Smiling General" or more recently the "Father of Development". Living not in the presidential palace but in his own home in a suburb of Jakarta, Suharto increasingly invoked the style of past Javanese heroes and mystics such as King Joyoboyo and the anti-Dutch leader Prince Diponegoro, personifications of the myth of Ratu Adil, the just king whose predicted arrival would bring peace, justice and prosperity to the nation.

But this cultivated surface was deceptive, and reality repeatedly destroyed the myth. The armed forces tamed insurrections in the outlying islands with sometimes brutal use of force and squashed any meaningful political development in the cities. In 1976 Jakarta annexed East Timor, a former Portuguese colony struggling for independence, after having invaded it a year before and killing thousands.

Repression continued, but Suharto remained deaf to all appeals for human rights within his kingdom. Freedom of speech was very limited and the press justifiably nervous. Whenever dissent broke the surface, independent newspapers and magazines were closed down. The general's smile concealed a steely toughness, and democracy played little part in the Pantjasila equation.

The deepest resentment was caused by Suharto's own family, including in-laws and his "cronies", who used their access to the president to enrich themselves. It was said that Suharto's six children and their spouses were somewhat restrained in their activities by their mother, Tien Suharto (the former Siti Hartinah), until her death in 1996, but even she had earned the nickname of "Madame Tien Per Cent".

Suharto's children all became extremely rich. At first they acted as agents for large investors, selling their access to the father's ear. Then they became tycoons in their own right, owning huge stakes in conglomerates in oil, banking, electronics, communications (including the media), food, timber, construction, mineral mining, shipping and manufacturing – the list is endless. In 1999, Time Asia valued Suharto's family fortune at $15bn and in 2004 Transparency International alleged that Suharto had embezzled more money than any other world leader in history – they estimated £15-$35bn over his 31 years in power.

Suharto blandly rejected the views of those colleagues brave enough to suggest that such nepotism was harming his presidency, claiming that entrepreneurial talent, not the family name, was the foundation of their huge fortunes. He showed similar lack of judgement in allowing the family to form close relationships with prominent members of the Chinese community, who make up 4 per cent of the population, but who own a disparate share (perhaps 80 per cent) of Indonesia's companies. Rich Chinese magnates were among the coterie of cronies who translated their access to Suharto, especially on the golf course, into billions.

Suharto's intimates served him badly. Just as Ibnu Sutowo, to whom Suharto had entrusted control of Indonesia's rich oil reserves, had been engulfed by scandals back in the 1970s, so the high-spending life styles and flamboyant disregard for law and morality of his latter-day sycophants besmirched Suharto's name. Typical was Mohamad "Bob" Hasan, who owned investments in cars, oil, airlines and timber in partnership with Suharto family members, and who was untroubled by the thick pall of smoke from burning plantations which cast a choking pall over Indonesia and her South-east Asian neighbours.

In 1996 the rising resentment of workers, students and the frustrated middle classes centred around Megawati Sukarnoputri, the daughter of Sukarno himself, who became a symbol of opposition to overcrowded slums, huge inequalities in the distribution of wealth, widespread corruption and authoritarian rule (and who in 2001 would become Indonesia's first female president). The army handled the popular critic with predictable clumsiness, harassing her and denouncing her as a Communist, until the declaration of her leadership of the Indonesian Democratic Party as illegal provoked widespread riots. Her opposition torch was taken up by a fiery Muslim leader, Amien Rais.

The series of East Asian financial crises struck a body blow to the increasingly fragile social fabric of Indonesia. As the Rupiah plunged in value, food became scarce and unemployment soared, Suharto stubbornly resisted the IMF's demands for wide-reaching reforms in return for international support. Gradually he gave way, closing debt-laden banks, guaranteeing savings and deposits and limiting loans, but failing to implement the restructuring of corporate foreign debt, to end political meddling in the economy or to take adequate action against the monopolies run by cronies and the family. In March 1998, at the age of 76 and after 32 years in power, the stubborn peasant-turned-sultan was re-elected for a seventh term, declaring that he alone could deal with the crisis.

Public anger erupted into countrywide demonstrations calling for Suharto's departure. In May he cut short an ill-advised visit to Egypt to announce that he would re-shuffle his cabinet and hold new elections on an unspecified date in which he would not be a candidate. As even elements of his army showed sympathy for the demonstrators, it was generally agreed that this response was inadequate and that the protest would continue. Obviously the Suharto years were nearing a bitter and belated conclusion.

Thus the man who expounded the virtues of "Asian Values" and justified his denial of human rights in the cause of the stability which only he could supply was ending his reign in scenes very reminiscent of the violence and confusion on which he had ridden to power in the mid-1960s. Hundreds died as long-nursed resentments led looters into Chinese quarters, shopping centres, hotels and other symbols of wealth. Suharto's position was increasingly untenable and his resignation followed.